How to create a financial forecast for a stage management company?
Developing and maintaining an up-to-date financial forecast for your stage management company is key in order to maintain visibility on your business’s future cash flows.
If you feel overwhelmed at the thought of putting together a stage management company financial forecast then don’t worry as this guide is here to help you.
We'll cover everything from: the main objectives of a financial forecast, the data you need to gather before starting, to the tables that compose it, and the tools that will help you create and maintain your forecast efficiently.
Let's get started!
Why create and maintain a financial forecast for a stage management company?
The financial projections for your stage management company act as a financial blueprint to guide its growth with confidence and ensure its long-term financial viability.
To create them, you will need to look at your business in detail - from sales to operating costs and investments - to assess how much profit it can generate in the years to come and what will be the associated cash flows.
During challenging market conditions, maintaining an up-to-date financial forecast enables early detection of potential financial shortfalls, allowing for timely adjustments or securing financing before facing a cash crisis.
Your stage management company's financial forecast will also prove invaluable when seeking financing. Banks and investors will undoubtedly request a thorough examination of your financial figures, making precision and presentation essential.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
What information is used as input to build a stage management company financial forecast?
A stage management company's financial forecast is only as good as the inputs used to build it.
If you are creating (or updating) the forecast of an existing stage management company, then you mostly need your accounting information, key historical operating non-financial data, and your team’s input on what to expect for the coming years.
If you are building financial projections for a stage management company startup, you will need to have done your research and have a clear picture of your competitive environment and go-to-market strategy so that you can forecast sales accurately.
For a new venture, you will also need a precise list of the resources needed to keep the stage management company running on a day-to-day basis and a list of the equipment and expenditures required to start the business (more on that later).
Let's now take a closer look at the elements that make up your stage management company's financial forecast.
The sales forecast for a stage management company
The sales forecast, also called topline projection, is normally where you will start when building your stage management company financial forecast.
Creating a coherent sales projection boils down to estimating two key drivers:
- The average price
- The number of monthly transactions
To do this, you will need to rely on historical data (for an existing business), market research data (for both new and existing stage management companies), and consider the elements below:
- Theater Industry Trends: As a stage management company, you are heavily dependent on the theater industry. Changes in the industry, such as the popularity of certain genres or the introduction of new technologies, can affect the demand for your services and ultimately impact your average price and number of monthly transactions.
- Competition: The presence of other stage management companies in your area can also have an impact on your business. If there are many competitors offering similar services, you may need to adjust your prices to stay competitive and attract customers. This could result in a change in your average price and number of monthly transactions.
- Seasonal Demand: The demand for stage management services may vary depending on the time of year. For example, there may be a higher demand during the holiday season or during summer when there are more outdoor events. This can affect your average price and number of monthly transactions as you may need to adjust your prices to meet the demand.
- Client Budgets: The budget of your clients can also affect your average price and number of monthly transactions. If your clients have a limited budget, they may opt for more affordable stage management services, resulting in a lower average price and potentially higher number of monthly transactions. On the other hand, if your clients have a larger budget, they may be willing to pay more for premium services, resulting in a higher average price and potentially lower number of monthly transactions.
- Economic Conditions: The state of the economy can also have an impact on your business. In times of economic downturn, businesses and organizations may have tighter budgets and be more hesitant to invest in stage management services, resulting in a decrease in your average price and number of monthly transactions. Conversely, during economic booms, businesses may have more disposable income and be more willing to spend on stage management services, resulting in an increase in your average price and number of monthly transactions.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
The operating expenses for a stage management company
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your stage management company on a daily basis.
Expenses normally vary based on how much revenue you anticipate (which is why, from experience, it is always better to start your forecast with the topline projection), and where your business is based.
Operating expenses for a stage management company will include some of the following items:
- Staff costs: This includes salaries, wages, benefits, and any additional costs associated with your employees such as training and uniforms.
- Accountancy fees: You will need to hire an accountant to handle your financial records, tax filings, and other financial tasks.
- Insurance costs: As a stage management company, you will need to have insurance to cover any potential liability, property damage, or injuries that may occur during a production.
- Software licences: You may need to purchase software licences for programs such as stage management software, accounting software, or graphic design software.
- Banking fees: This includes fees for bank accounts, credit card processing, and any other financial services you may need.
- Rent: If you have a physical office or rehearsal space, you will need to pay rent for that space.
- Utilities: This includes electricity, water, and any other necessary utilities for your office or rehearsal space.
- Marketing expenses: You will need to budget for marketing materials such as flyers, posters, and advertisements to promote your productions.
- Travel expenses: If you have productions in multiple locations, you will need to budget for travel expenses for your staff and crew.
- Supplies: This includes any necessary supplies such as office supplies, props, costumes, and other production materials.
- Professional development: As a stage management company, it is important to invest in ongoing professional development for your staff to stay current in the industry.
- Legal fees: You may need to consult with a lawyer for contracts, copyright issues, and other legal matters related to your productions.
- Maintenance and repairs: This includes any necessary maintenance or repairs for equipment, costumes, props, and your office or rehearsal space.
- Office expenses: This includes expenses such as office rent, furniture, equipment, and supplies for your office space.
- Production expenses: These are costs associated with putting on a production, such as venue rental, set construction, lighting, and sound equipment.
This list will need to be tailored to the specificities of your stage management company, but should offer a good starting point for your budget.
What investments are needed to start or grow a stage management company?
Creating and expanding a stage management company also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a stage management company could include elements such as:
- Stage Equipment: This includes items such as lighting fixtures, sound equipment, and stage rigging. These are essential for a stage management company and can be quite costly.
- Stage Props and Set Pieces: Depending on the type of productions your company manages, you may need to purchase or rent various props and set pieces. These can include furniture, backdrops, and other items needed to create a specific atmosphere or setting for a production.
- Computers and Software: A stage management company may need to invest in computers and software for tasks such as creating production schedules, managing budgets, and communicating with the production team.
- Office Supplies and Equipment: This includes items such as desks, chairs, printers, and other necessary office supplies. These are essential for the day-to-day operations of a stage management company.
- Storage and Transportation: Depending on the size of your company and the productions you manage, you may need to invest in storage space for equipment and props, as well as transportation options for moving these items to and from different venues.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your stage management company.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
The financing plan of your stage management company
The next step in the creation of your financial forecast for your stage management company is to think about how you might finance your business.
You will have to assess how much capital will come from shareholders (equity) and how much can be secured through banks.
Bank loans will have to be modelled so that you can separate the interest expenses from the repayments of principal, and include all this data in your forecast.
Issuing share capital and obtaining a bank loan are two of the most common ways that entrepreneurs finance their businesses.
What tables compose the financial plan for a stage management company?
Now let's have a look at the main output tables of your stage management company's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your stage management company's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a stage management company should normally show:
- Sales growing above inflation
- Stable or expanding (ideally) profit margins
- A net profit
This will of course depend on the stage of your business: a new venture might be loss-making until it reaches its breakeven point in year 2 or 3, for example.
The projected balance sheet
Your stage management company's projected balance sheet provides a snapshot of your business’s financial position at year-end.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business possesses including cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. They include accounts payable (money owed to suppliers), taxes payable and loans from banks and financial institutions.
- Equity: is the combination of what has been invested by the business owners and the cumulative profits and losses generated by the business to date (which are called retained earnings). Equity is a proxy for the value of the owner's stake in the business.
The cash flow forecast
Your stage management company's cash flow forecast shows how much cash your business is expected to consume or generate in the years to come.
It is best practice to organise the cash flow forecast by nature to better explain where cash is used or generated by the stage management company:
- Operating cash flow: shows how much cash is generated by the operating activities
- Investing cash flow: shows how much will be invested in capital expenditure to maintain or expand the business
- Financing cash flow: shows if the business is raising new capital or repaying financiers (debt repayment, dividends)
Keeping an eye on (and regularly updating) your stage management company's cash flow forecast is key to ensuring that your business has sufficient liquidity to operate normally and to detect financing requirements as early as possible.
If you are trying to raise capital, you will normally be asked to provide a monthly cash flow forecast in your stage management company's financial plan - so that banks or investors can assess seasonal variation and ensure your business is appropriately capitalised.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Which tool should you use to create your stage management company's financial forecast?
Using the right tool or solution will make the creation of your stage management company's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your stage management company's projections
The modern and easiest way is to use professional online financial forecasting software such as the one we offer at The Business Plan Shop.
There are several advantages to using specialised software:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You have access to complete financial forecast templates
- You get a complete financial forecast ready to be sent to your bank or investors
- You can easily track your actual financial performance against your financial forecast, and recalibrate your forecast as the year goes by
- You can create scenarios to stress test your forecast's main assumptions
- You can easily update your forecast as time goes by to maintain visibility on future cash flows
- You have a friendly support team on standby to assist you when you are stuck
- It’s cost-efficient and much cheaper than using an accountant or consultant (see below)
If you are interested in this type of solution, you can try our forecasting software for free by signing up here.
Calling in a financial consultant or chartered accountant
Outsourcing the creation of your stage management company financial forecast is another possible solution.
This will cost more than using software as you can expect as your price will have to cover the accountant’s time, software cost, and profit margin.
Price can vary greatly based on the complexity of your business. For a small business, from experience, a simple three-year financial forecast (including a balance sheet, income statement, and cash flow statement) will start at around £700 or $1,000.
Bear in mind that this is for forecasts produced at a single point in time, updating or tracking your forecast against actuals will cost extra.
If you decide to outsource your forecasting:
- Make sure the professional has direct experience in your industry and is able to challenge your assumptions constructively.
- Steer away from consultants using sectorial ratios to build their client’s financial forecasts (these projections are worthless for a small business).
Why not use a spreadsheet such as Excel or Google Sheets to build your stage management company's financial forecast?
Creating an accurate and error-free stage management company financial forecast with a spreadsheet is very technical and requires a deep knowledge of accounting and an understanding of financial modelling.
Very few business owners are financially savvy enough to be able to build a forecast themselves on Excel without making mistakes.
Lenders and investors know this, which is why forecasts created on Excel by the business owner are often frowned upon.
Having numbers one can trust is key when it comes to financial forecasting and to that end using software is much safer.
Using financial forecasting software is also faster than using a spreadsheet, and, with the rise of artificial intelligence, software is also becoming smarter at helping us analyse the numbers to make smarter decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and keeping your projections up to date as the year progresses is manual, tedious, and error-prone. Whereas financial projection software like The Business Plan Shop is built for this.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Use our financial projection templates for inspiration
The Business Plan Shop has dozens of financial forecast templates available.
Our examples contain a complete business plan with a financial forecast and a written presentation of the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own stage management company, looking at our financial forecast template is a good way to:
- Understand what a complete business plan should look like
- Understand how you should model financial items for your stage management company
Takeaways
- A financial projection shows expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial forecast up-to-date is the only way to maintain visibility on future cash flows.
- Using financial forecasting software makes it easy to create and maintain up-to-date projections for your stage management company.
You have reached the end of our guide. We hope you now have a better understanding of how to create a financial forecast for a stage management company. Don't hesitate to contact our team if you have any questions or want to share your experience building forecasts!
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Also on The Business Plan Shop
- Example of financial projections
- How to project revenues for a business?
- Example of financial forecast for business idea
Know someone who runs or wants to start a stage management company? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
